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| NOVEMBER 2005 | |
| From the CEO's Desk | |
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Today, the most certain thing in Indian iron & steel industry is 'uncertainty'. It was only couple of months back that the industry was unable to cope up with the rising demand and many items such as billets, sponge iron, certain ferro alloys used to command a premium. It was also discussed during 5th Asian Steel Conference and other similar forums that this bullish sentiment would continue for atleast next six months or so. It was argued that the demand is generally slow during monsoons and would pick up by October or November and would continue to be strong till atleast the financial year end. But it was not to be ! ! ! The prices for all steel products without any exception have come down. Many induction furnace units, sponge iron plants, rolling mills have reduced their production to control the losses. I am told many such units are for sale too. Quite unbelievable and totally unexpected ! ! Why did it happen ? What has gone wrong in such a short span of time ? In my opinion, everybody was painting a very bright picture of our industry which was slightly away from reality. Yes, I still believe that a country like India and in general Asian region has a great future as far as iron & steel industry is concerned, but the speed at which every plant is expanding is something one should be worried about. If the demand does not grow as expected there is surely going to be a mismatch between demand and production at a later date. Secondly, today, we are seeing a lot of new entrants in the industry. While some are serious and want to be long term players, others are fly by night operators who want to make lot of money in a short time and go away. This is certainly not a welcome situation for the industry. Thirdly, the situation in China is still quite fluid and this will surely affect the industry in Asian region. I still hope that most of the factors mentioned above are self correcting and can get nullified over a time frame but one should not be over playing and assuming more things than actual. If these things are taken care of, the iron & steel industry in Asian region will have seamless growth in coming years. D.A.Chandekar
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ELECON Engineering Company Ltd. Metal + Metallurgy China Returns In 2006 |
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Vizag Steel records impressive Oct result Vizag Steel achieved an impressive performance on all fronts during the month of October, 2005 witnessing a hot metal production of 3,33,255 tonnes, liquid steel production of 2,95,377 tonnes and saleable steel production of 2,37,016 tonnes. Production of 2,00,200 tons of Billets in October’2005 is 127 % of the rated capacity and is the best production for any month since inception. The production of 2,95,377 tonnes of liquid steel, 81,013 tonnes of bars and value added production of 1,00,110 tonnes during October’05 are the best for “any month of october”, since inception. On the marketing front, VSP recorded a sales turnover of Rs 555 crores in October 2005 and achieved a cumulative sales of Rs 4283 cores during the period April-October 2005 which represents a growth of 6.73 % over the sales during the corresponding period (Rs 4013 crores), last year. |
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Elecon bags coal handling plant order from Reliance Elecon Engineering Company Ltd of Gujarat and Tecpro of Chennai have been selected by Reliance Energy, the EPC Contractor for the Project, to supply coal handling plant to Haryana State Electricity Board for Yamunanagar Power Station, Reliance’s first coal based thermal power station, on a turnkey basis. The entire contract is to be completed within 18 months and the value of the order amounts to Rs 86.5 crores, of which the order value to Elecon is Rs 31 crores. The scope of work includes two wagon tipplers, one stacker-cum-reclaimer apart from crushing and screening equipments. This would be the 75th coal handling plant supplied by Elecon, the highest in number installed in the country. Elecon has also successfully supplied most of the coal handling plants for thermal power stations in Gujarat, Maharashtra, Rajasthan and Madhya Pradesh. The Yamunanagar Thermal Power Project is scheduled for commissioning in 2007. |
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Anti-dumping action against imports Indian steel manufacturers are paying more attention to the growing import volume of steel and they may take anti-dumping action. From March to September this year, total steel import volume increased rapidly. Imports were up 50 percent compared to the same period last year. Hot rolled coils in particular saw a big rise. Imports of HR coils rose by 137 percent to 1.07 million tonnes from March to September. So far they are investigating this matter and haven’t submitted anything to the government. |
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H&K enters South India, too, with Thermex order The increased demand from the civil sector for Grade 500 international quality of rebars as per the Thermex QST brand has resulted in an unprecedented 22 orders for Thermex Systems on H&K from 01 January 2005 till 31 October 2005. H&K has had to resort to urgent action to deal with the situation through doubling office space, and augmenting its engineering. Besides North India, West Bengal and Maharashtra the other areas where Thermex has become the preferred rebar are Orissa, Chattisgarh, Gujarat, Meghalaya, Arunachal Pradesh, Andhra Pradesh and Karnataka. Thermex has made its presence in South India too. As against an average commissioning of Thermex Systems in 5 – 7 mills each year, 8 new mills have already commenced production of Thermex 500 this year with five in the erection and commissioning stage. These 13 mills alone will add one million tonnes of Thermex Grade 500 rebar availability in the country. It is expected that around 16 to 20 bar mills would commence production of Thermex 500 QST bars in 2005. The financial year end on 31.03.2006 should see the Thermex rebars licensed capacity at well over 5 million tonnes – about a 50% market share. In spite of the increased number of Thermex Licensees, quality audit of each licensee continues to be carried out every three months by the designated laboratory without any let up – an essential feature of the H&K philosophy of ‘service to society’. |
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Tisco, BlueScope unit flagged off The new Joint venture company in India between Tata Steel and BlueScope Steel dedicated the site for its proposed metallic coating and painting facility at Bara in Jamshedpur. The chief minister of Jharkhand, Arjun Munda, unveiled the site dedication plaque along with B Muthuraman, managing director of Tata Steel. At the function, Munda said the setting up of the new facility by Tata Steel and BlueScope indicated Tata Steel’s commitment to the state. Muthuraman said Tata Steel and BlueScope Steel shared a similar approach to value creation in the steel business. Consumers would benefit from the range of solutions that would now be available to the construction industry. The venture would increase the use of value added steel products, he added. Present at the occasion were senior executives from BlueScope Australia and Tata Steel. The new facility will have an annual metallic coating capacity of 250,000 tonnes and paint line capacity of 150,000 tonnes. The new facility was expected to be operational by 2008. The capital cost of the joint venture would be approximately Rs 1,400 crore. The investment was consistent with its strategy of growing its downstream value-added products business in Asia. The joint venture company would build a new business across India and south Asia. It would manufacture zinc and aluminium metallic coated steel, painted steel and rollformed steel products, and deliver pre-engineered buildings (PEBs) and other building solutions. The 50:50 joint venture agreement for the company would be officially signed at a ceremony soon. |
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Shrilalmahal tastes diversification into steel Leading basmati rice exporter Shrilalmahal Group on Thursday said it would come up with an initial public offer in 2006-07 and announced major diversification plans in steel and packaged food segments. ‘We are planning to enter the stock market by April 2006. We will be one of the few agro companies listed in the stock markets,’ Shrilalmahal’s managing director Prem Garg said after inaugurating the company’s corporate office. The company, which exports rice to Gulf, Europe, USA and African nations, is now diversifying into other sectors like steel. The agro firm, which has been exporting iron ore to countries like China and Japan for the last three years, will be acquiring a steel plant in Nigeria by December. ‘The total capacity of this plant is 500 tonne per day,’ company’s Executive Director S K Valecha said. It also plans to enter the food processing segment and will be offering packed basmati rice, for which the research and development is in progress. Valecha said that the company’s exports for 2004-05 touched Rs 425 crore. This year, it is seeing 100 per cent growth and the company expects the export to be more than Rs 800 crore. |
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Market expectations of a steep fall in steel prices are unlikely to materialise, in view of the firming up of prices all over the globe, according to Visakhapatnam Steel Plant (VSP) Chairman and Managing Director, Y. Siva Sagar Rao. Stating that the coming months would witness a boom in the international demand for steel, he said that in the U.S. itself ‘steel is in high demand now, thanks to new infrastructure developments taking place there.’ The prevailing price of structural steel in the U.S. was $600 per tonne against the June-September range of $535-540. Similarly, there was a price jack-up in respect of long products such as wire rods, he said. Siva Sagar Rao said there were also indications that steel prices in Europe and South Korea were hardening. China, which was importing steel in a big way to make preparations for the 2008 Olympics, was likely to continue the imports because of its plans to host the International Industrial Expo-2010 in Shanghai. As far as India is concerned, the VSP chief noted that steel consumption by the manufacturing sector is slated to go up in the near future. |
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Tata to buy shares in second Australian coal mine After successfully purchasing a 5 percent share in Australia´s Carborough Downs coal mine, Tata Steel has received permission to purchase the shares of the second coal mine in the country. Tata is expecting to sign the purchase agreement soon. Tata needs 5 million metric tonnes of coal annually and of this, 45 percent needs to be imported. Now, Tata gets 1.8 million metric tonnes from Carborough Downs. Now Tata, plans to secure a more stable supply of coal by purchasing shares in coal mines in Australia. |
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Mittal Steel top company in SA Mittal Steel South Africa, a former state-owned company taken over by London-based steel magnate Lakshmi Mittal´s LNM Group last year, has emerged as the top performing blue chip company over five years in South Africa. It has moved from fourth to second position in the annual list of the country’s Top 100 Companies. Mittal Steel SA had shown compound growth of 93 percent over the past five years, well ahead of its closest rival Edgars Consolidated Stores, a national clothing group, which had compound growth of 61 percent. This was in a list of the 40 top performing companies on the Johannesburg Securities Exchange, a new grouping introduced for the first time this year after criticism about the annual Top 100 methodology, which allowed small companies to show high growth because it is easier for their share prices to rise dramatically. The Top 40 companies are meant to provide shareholders with steady earnings and growth in the share price and dividends. The Top 100 list, however, is based on the return on 10,000 rands invested for five years, where Mittal Steel SA was beaten into second place by construction company Grindrod, with compounded growth of almost 97 percent. Mittal Steel SA is the result of a plan over the past four years which initially saw LNM entering into a Business Assistance Agreement with the then state-owned Iscor, founded in 1928. A huge cash injection and technology transfer to turn around the ailing company grew to a stage where LNM acquired a majority shareholding of just over 50 percent and renamed the company Ispat Iscor two years ago before it finally became Mittal Steel SA. |
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Baosteel developing wide plate material production In order to set up a rough base to expand their market, Baosteel´s Research and Development Department is actively developing new brands of wide plate. The company has already developed over 70 new brands with width of between 150mm to 4500mm up to the end of October this year. The new product applications have already been approved and the new products can be used for tanker, reactor, building, and bridges. |
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American GI price keeps sliding The trend of American plate market is going in different directions. The GI plate price has been dropping continuously. The price of imported products from China has dropped by US$30/ton to US$600/ton C&F from the beginning of November. In contrast to that, the price of GI plate and electric steel market is supported by good demand and supply balance that is expected to last until next year. The price is expected to increase further as well, reports said. |
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Steel plate market in US tight due to strong demand Steel plate market is hot in US because of strong demand after two hurricanes Katrina and Rita. Prices of carbon plate and coiled plate are at $800 to $820 per tonne. The mills in USA have adjusted plate prices by shifting raw material surcharge. Mittal USA raised its base price to $41 cwt. CitiSteel USA will increase its plate surcharge to $82 per tonne. Ipsco Inc will raise its plate surcharge $99.65 per tonne. Nucor increased its surcharge to $103 per tonne. Due to the increasing scrap and booked out for orders, the plate market will be tight until the early of next year. |
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14.6 mt demand for steel products in Iran for the next year According to figures 14.6 million tonnes demand for steel products in Iran for the next year has been estimated. Iran steel industry may get involve in a domestic crisis because mostly mills are increasing production capacity and also some new private steel mills are coming up while demand for finish steel products increased by a very less rate previous year. Although some experts say such ideas but according to figures demand for steel products estimated to be increased by 7.06 percent by 2006 and reach to 14.6 mt / Year. Iran by around 9 million tonnes / year production is largest steel producers in the Middle East and aims to reach to 29 million tonnes / year by the end of 4th development plan (2009). |
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Blue Scopeincreases GI and PPGI production capacity Australia´s Blue Scope announced that they will invest US$ 106 million to build a new PPGI production line and upgrade the existing product line for their GI and PPGI at their mill in Indonesia, reports said. This new production line produce 0.2 to 0.4 mm thick PPGI, used in the residential construction field. As a result, GI capacity will increase from 100, 000 tonnes per year to 305, 000 tonnes per year while the PPGI capacity will increase from 50,000 tonnes per year to 125,000 tonnes per year. Additionally, BlueScope has invested US$730 million for building downstream processing mills. These projects will increase the capacity of GI and PPGI to 1, 460, 000 tonnes per year and 635,000 tonnes per year respectively by 2009. One of the PPGI production lines invested US$105 million in the south of Vietnam will be put into use next month. |
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Weak demand in South Korea causes lower steel output Due to the weak domestic demand, steel production in South Korean dropped 1.4 percent for the first nine months of the year. The total output for the period reached 46 million tonnes. Sales in the domestic market totaled 35.1 million tonnes, dropping 4.2 percent compared to the same period last year. Imports of steel products rose 9.3 percent to 14.5 million tonnes. The export quantity was also up with 16.4 million tonnes exported, increasing 7.3 percent from last year. The stock levels reached 2.3 million tonnes, increasing 38.5 percent compared the same period last year. |
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Sino-Steel, Chuanwei Group sign strategic partnership agreement To integrate their resources and develop foreign resources, China´s Sino-Steel and Chuanwei Group signed a strategic cooperation agreement. The two companies already have a close relationship in the industry chain. Sino-Steel, a integrated steel enterprise and the Chuanwei Group will cooperate in raw material supplies, sales as well as several other fields. Chuanwei has an annual steel production capacity of 3 million tonnes. |
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China to limit steel output from next year China will limit their steel production to 450 million tonnes per year The China Iron and Steel Association announced that they will limit production during the next five years. This new 5 year plan is the association’s eleventh five-year (2006-2010) and will be released in January 2006. The plan was announced in a bid to solve China’s problem of the overproduction of steel products that has caused China’s domestic steel price to shrink. China’s current steel output capacity is about 500 million tonnes per year, far exceeding the demand in the domestic market. |
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EU levy anti-dumping tax on Chinese stainless steel fasteners The European Union has formally authorized the levying of anti-dumping tax on stainless steel fastener products form China and some other Asian countries. They have listed the tax rate for different countries. The tax imposed against imports from China is 27.4 percent, 23.6 percent for imports from Taiwan, 14.6 percent for Thailand, 24.6 percent for Indonesia and 7.7 percent for Vietnam. The EU will also provide special policy for the companies that cooperated during the investigation. Those companies will receive a lower the tax rate. |
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